One of a CEO’s primary roles is handling difficult people.
I’ve heard several stories recently of CEOs dealing with one of their senior leaders whose behavior is detrimental to the organization.
In one company, a CEO told me he has learned his President berates and tears down his direct reports, rarely advocates on their behalf and has little interest in ideas that are not his own. By contrast, this CEO is trying to build a culture that develops people and shares best thinking throughout the organization.
In another, a CEO has received reports that one of his SVPs is not carrying her weight on the executive team.  Other members are growing frustrated at having to do the work she should be doing.
At the least, senior leaders like these two are “prickly” – everybody moves gingerly around them, trying to avoid getting stung.  At worst, they are “radioactive,” melting down everyone and everything they come in contact with.
Interestingly, CEO’s, the ones with the most position and power to do something about these types, can find it difficult to do so.  Often-times, a CEO is blind to the negative behavior — the senior leader is on their best behavior for the CEO, while they rain down negativity on everyone else below them.  Other times, the CEO sees what others see, but, if the problem leader is “getting results,” the CEO is willing to excuse the behavior — the ends justify the means.  Finally, some Chief Executives see the behavior, find in inexcusable, but don’t know how to address it.
CEO’s must possess the skill to confront conflict in their ranks.  Otherwise, it festers, creating winners and losers.  The problem leader may be the winner for a season.  And so long as they are “the winner” the  performance of those around them gets degraded and marginalized.  The company can end up being the ultimate “loser” because teamwork breaks down and the company fails to get the best from its collective talent.
In their book, Why CEOs Fail, David Dotlich and Peter Cairo identify three types of leaders that may fail to take action with a difficult (or dangerous!) subordinate:

1. The Overly Cautious Executive. For these leaders, any significant action (like confronting or even firing a subordinate) entails major risk.  This type of leader may come up with all sorts of excuses for not letting someone go — he’s been with the company for years, her pluses outweigh her minuses, he has too much potential — but it’s obvious to everyone this employee is a bad fit.
2. The Eager-to-Please Executive. Many CEOs are extremely eager to please and in fact they have reached their capstone position precisely because they are skilled at anticipating and meeting expectations.  But the strength becomes weakness when these leaders refuse to face tough people decisions.
3. The Aloof Executive. Conflict is emotionally difficult, and aloof leaders have a hard time dealing with strong feelings.  They rationalize that the highly paid executives who work for them should be able to resolve their differences.  In the worst cases, [aloof] leaders may not even be aware that conflict exists.  They unconsciously screen out all conflict because they don’t want to confront it.

I agree with Dotlich and Cairo’s summary:

The inability to act decisively on under-performing but loyal subordinates is a key predictor of CEO failure.

Here, then, are some beginning ideas that I use with CEOs who acknowledge they could do better in this area:

• Don’t delay. Decide NOW to confront inappropriate behavior in your subordinate.  Challenge comes with the role of Leader.  Step up to this challenge, and lead!
• Identify what specific behavior, or action, needs to change. You may not be able to change the subordinate’s unseen thinking or feeling on the matter, but you absolutely can insist on different behavior they manifest outwardly with others.
• Address the conflict constructively and directly. Focus on the issue — the behavior — not the person. If the tone begins to get personal, return the conversation to the specific behavior that needs to change.
• Set clear expectations for a change in behavior. And make it clear you will be following up to hold the subordinate accountable.

Of course, if the senior leader wants to change, but is finding it difficult to do so, this is an ideal scenario to engage a qualified leadership coach to help the executive for a specific time period.
If the senior leader is unwilling or unable to make the appropriate changes, the CEO should strongly consider showing him or her the door.  Don’t become a leader with a reputation for “carrying” subordinates.  This only alienates your other star leaders.  Given enough time, you will be leading an organization dominated by under-performers, as the really good leaders hit the exits themselves.
FORWARD THIS TO A LEADER.